Pharmaceutical Stocks Regain Health As Brokers Turn Bullish

Coco

2017-12-28

Pharmaceutical stocks seem to have regained their health, as the stocks notched up gains of up 15% on Wednesday. Indian pharmaceutical market’s (IPM) secondary sales continued to grow at a healthy rate in November, led by strong volume growth, said Motilal Oswal in a report.

“After declining 0.5% year-over-year over June-August 2017, industry volumes grew by 4.7% over September-November 2017. We believe that the negative impact from GST transition-related issues is now behind, and expect a gradual recovery over the coming months,” pointed out Motilal Oswal in a report. The S&P BSE Healthcare index closed the session up 1.84% at 14,811.38 points, while Nifty Pharma index ended 2.38 % higher at 9,639.8 points.

In the S&P BSE Healthcare index, Mangalam Drugs & Organics was the top gainer. It hit a 52 week-high of Rs 221 before retracing to close at `214, 14.8% higher than its previous close. Sun Pharma Advanced Research Company too hit its 52 week high of `511.55 before ending the session 7.75% higher at Rs 463.60.

The S&P BSE Healthcare index has delivered a return of 0.57 % on year-to-date basis, making it one of the underperforming sectors in 2017. However, Kamlesh Rao, MD and CEO of Kotak Securities is optimistic on the pharmaceutical sector outlook in 2018.

“The pharmaceutical sector has gone through its worst phase. Change in strategies by key players will fructify in the next two-three years. Earnings and growth are likely to recover from FY19E onwards,” said Rao.